Turning the tide? Bullish economic outlook for SA

ECONOMISTS' FORECAST

- TRACY-LYNN RUITERS

WHILE there is a silver lining on the horizon for the South African economy, dark clouds still remain, warned economists on the outlook for 2026.

They said South Africa enters the New Year with a fragile but improving economic outlook, buoyed by easing inflation, lower interest rates, and improving confidence following key institutional and policy gains.

While economists agree that growth will remain modest, most see the year ahead as meaningfully better than 2024 and 2025, provided political stability holds and longstanding structural constraints are steadily addressed.

According to economist Ulrich Joubert, early indicators suggest 2026 could mark a turning point after several difficult years.

"The indications are that we should have a better year in 2026 than in 2025, and certainly better than in 2024," he said, pointing to improving macroeconomic fundamentals and supportive global conditions.

Most forecasts place GDP growth for 2026 between 1.5% and 1.8%. While this represents a steady improvement from the estimated 0.5% recorded in 2024, economists caution that it remains far below the levels needed to address South Africa's deep-seated unemployment and inequality challenges.

Inflation, interest rates and household relief

Prof Raymond Parsons of NWU Business School describes the outlook as one of "cautious optimism", noting that the economy ended 2025 in a stronger position than a year earlier.

"A cumulative set of favourable factors promises better economic traction in 2026," he said, citing four consecutive quarters of growth, easing inflation, and a firmer policy environment.

However, Parsons warned that these are necessary but not sufficient conditions for much higher growth. While the Government of National Unity (GNU) has set a target of at least 3.5% growth by 2030, current projections remain too modest when compared to other emerging markets.